Watch what central bankers say, not what they do

LONDON (Reuters) - Central banking is in a state of flux as policymakers from Tokyo to Washington ditch prevailing orthodoxies to try to grab a bigger share of a slow-growing global economic pie.

That's why the focus this week will be on what European Central Bank (ECB)Governor Mario Draghi has to say about the strength of the euro and what Canadian central bank chief Mark Carney might have in mind when he succeeds Mervyn King at the Bank of England (BOE) in July.

Draghi holds a news conference on Thursday after an ECB policy-setting meeting. On the same day, with delicious timing, Carney will be wrapping up testimony to British lawmakers just as the BoE announces the results of its own policy meeting.

The unanimous verdict of economists polled by Reuters is that neither bank will change its stance. The environment, however, is shifting, presenting both with unwanted challenges.

The ECB must keep a close eye on the euro, which has risen to a 14-month peak against the dollar and a 30-month high against the yen, reflecting the Federal Reserve's promise to keep buying bonds until U.S. unemployment falls much farther and the Bank of Japan's plan for a much looser monetary policy.

Exchange rates have much less of an impact on trade volumes than the state of external demand.

But, with global growth languishing, the relative performance of euro zone exporters will take a hit, said Daniel McCormack, a strategist at Macquarie in London.

"The euro could well be starting to cause a bit of pain already. It's moved up significantly, and in the context of what Japan's doing and the Fed's desire to get the dollar down or keep it low, it will have some impact," he said.
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